Banks Slash USD/JPY Forecasts Amid Improved Japan Policy

Goldman Sachs and Crédit Agricole have reduced their forecasts for the US Dollar to Japanese Yen (USD/JPY) exchange rate. Goldman now predicts that USD/JPY will trade at 150 in twelve months, down from its previous target of 165.

The banks attribute this downward revision to improving Japanese policy and potential pension-fund inflows. Goldman notes that domestic policies are becoming more constructive, reducing pressure on the currency.

Crédit Agricole's revised forecast also puts USD/JPY at 150 in twelve months, but later than Goldman's target, in the final quarter of 2027. The bank suggests that repatriation and intervention risk could further boost the Yen if Japan's Government Pension Investment Fund increases domestic bond holdings.

However, Crédit Agricole cautions that without a change in asset allocations, elevated oil prices and a BoJ merely matching Fed rate hikes would limit further Yen gains.